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Government announces a crackdown on exclusivity clauses in zero hours contracts

25th June 2014
The Government has published a press release setting out its response to the consultation on the use of zero hours contracts. The focus of the approach adopted by the Government appears to be to ban the use of "exclusivity " clauses within zero hours contracts. It does not propose a ban on the use of zero hours contracts as a whole, noting that "Zero hours contracts have a place in today's labour market."

Exclusivity clauses prevent an individual from working for more than just the one employer. It is quite common to see these within contracts for senior employees in an organisation. However the announcement from the Government targets the use of these restrictions within zero hours contracts- where the individual has no guarantee of any set number of hours of work from their employer. It is clear to see the hazard for individuals that have zero hour contracts, as those contracts do not provide guaranteed hours of work or financial stability. Then to have an exclusivity clause in their contract stops them seeking any other work to top up their earnings. In the press release the Government state that "The use of exclusivity clauses in zero hours contracts undermines choice and flexibility for the individuals concerned."

The Government state that some 83% of the responses to the consultation were in favour of a ban on exclusivity clauses. They estimate that 125,000 workers are tied to exclusivity  clauses in zero hours contracts, so will be effected by the ban.

Further consultation on how to prevent "rogue" employers from evading the excluvity ban, by for example offering one-hour fixed contracts. The Government will work with business and Trade Unions to develop a Code of Practice on the fair use of zero hours contracts, and will work on a review of guidance to improve information available to employers and individuals on the use of zero hours contracts. 

The Government points to the benefit of the use of zero hours contracts in the flexibility they provide for "students, older people and other people looking to top up their income and find work that suits their personal circumstances." While that is a fair observation, we are aware that a significant number of people working on zero hours contracts are not students, nor older workers seeking to reduce their working hours but maintain some level of income. Many sectors are using zero hours contracts (such as catering and hospitality, and leisure industries) for large proportions of their workforce, young, old, experienced, inexperienced alike, including people with significant domestic committments. So while the ban on an exclusivity clause presents some benefit to such individuals, it does not remove the inherent financial insecurity involved with zero hours contracts. It is also difficult to see how the Government can eliminate abuse of the ban, and employers may look unfavourably to individuals that seel work elsewhere in addition to with them, particularly when making the decision on which member of staff to call in to work any particular shift or hours.  

The ban will be part of the Small Business, Enterprise and Employment Bill, which has been introduced in Parliament on the 25th June 2014.

If you require advice or assistance on the matters raised in this article do not hesitate to contact us at Hallett Employment Law Services Ltd.

For the press release see the above website.   

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